China’s new $100 billion metropolis: Is Forest City a Field of Dreams?

In Johor Bahru did Kublai Khan/A stately pleasure dome decree …

China’s getting good at building islands. So far their method of dredging up sand for gun-platform berms in the South China Sea has been for strategic and military purposes, in other words to claim more territory. Recently, though, a massive real estate project has dwarfed all previous efforts by the Middle Kingdom to impose its presence on Nature.

Before I begin to describe what’s going on just off the south coast of Malaysia, let me say why I am interested in the subject.

I’ve written a few times before, here, here and here, about how and why India should transform its neglected territories, the Andaman Islands, into a new ecological Hong Kong/Dubai with tri-services military presence and a deepwater shipping port for freight and luxury liners.

The geographical position of Port Blair, on South Andaman Island, is almost unrivalled in strategic terms—holding the fort, so to speak, at the north end of the Malacca Straits, and having also a commanding position over the other, more southerly sea-route route from Australia around the west of Java and Sumatra. Perfect for trade, tourism and above all, security. I suggested a fabulous, futuristic—which is to say sensitive and ecological—enhancement/terraforming of Port Blair and its environs, and imagined it would be a very big project, probably at least $20 billion for the first stage and $100 billion plus overall. Above everything, I said that it could transform India’s regional heft as a trading and defensive security power, and add at least a percent or two to India’s GDP performance as it directly rivals China for South Asian-Western trade.

So now it appears that China has had a similar idea and is spending—wait for it—$100 billion on creating an island city of its own.

Forest City

On the southern tip of Malaysia is Johor Bahru, a city (incorporated in 1994 with a population of half a million) and an economic development zone, presided over by the all-powerful Sultan Ibrahim Ismail, the local Kublai Khan. The east-west Johor Straits, at the southern end of the roughly north-south Malacca Straits, narrows into a channel that follows all the way around the north and north-east shoreline of Singapore. At the Westerly mouth of the channel, where the E3 freeway bridge connects Singapore with mainland Malaysia, an enormous new development is being built.

It is constructed on four massive artificial islands that will contain 500,000 apartments, together with offices, hotels and so on, and be home to around 700,000 people. All this from scratch, where before there was simply a wide expanse of water: seagrass meadows waving gently under a clear tide and reclining on the littorals, picturesque fishermen’s villages. The peaceful currents flowed back and forth between the two neighbours, Malaysia and Singapore, in and out of the mouth of the waterway, as they had done since time immemorial.

But Forest City, as the new settlement will be known, is like a giant cork in the mouth of the straits, a dam, effectively, that will raise the water-level, narrow the flow and therefore increase the velocity and power of the water. But we’ll come to the ecological aspects later.

Forest City is not a Chinese government project—or at least, it is as private as private enterprise can get in China. The idea is to make a killing by selling apartments to prosperous Chinese. In fact if you buy an expensive apartment in Shanghai, you will be given another one in Forest City for free. Nonetheless, it is again a projection of Chinese presence and power. This is the creation of a Chinese city, provocatively, smack in the middle of the territory of two other sovereign states. Malaysia agreed to it but Singapore, which the project directly abuts, is not very happy.

Half a million new apartments, at an average price of less than $300k, means that the much pricier property in Singapore will likely crash. (And it’s more houses than have ever been built in the city-state.) And while $300k is cheap for Singapore, it is astronomical for most Malaysians across the straits to the north, with the result that most of the new population in Forest City will be foreign (that is, Chinese), despite it being in Malaysian territory.

Still, money’s what counts, ain’t it?

A new five-star hotel is already up and running to accommodate prospective buyers. The artificial causeway in the straits that’s used to haul the millions of tons of sand needed onto the new islands has already impacted the daily harvests of seafood the locals depend on. (For a brilliant assessment of the local impact of the building see this article in The Diplomat. The authors have used pseudonyms in an attempt to avoid prison or nine grams of lead.)

It’s not altogether clear, from what I’ve been able to find out, whether there will be hospitals, schools and other necessary facilities included on the islands, which seem overwhelmingly residential. Will the new inhabitants use the mainland and Singapore for their essential and emergency needs? It will be interesting to see whether an entirely artificial city—in contrast to the expansion of a well-established one such as Port Blair—can become socially successful.

What looks like large-scale ecological destruction on the ground is being relentlessly spun by the constructors (and their influential investors) as some sort of innovative clean-air project, due to the fact that there will be small trees on the balconies of the hundreds of condo towers. The Western mainstream media, no surprise, is lapping up the good news.

But as one anonymous local put it, “Trees on balconies won’t help with shoreline erosion.”

In truth, Forest City is the opposite of what Port Blair could become. It’s in shallow water, so no paramax port is possible; there’s no security angle either, except to insert a piece of China as a foreign body into the arteries connecting two other countries—the world can make of that tactic what it will, but if it’s OK with the Sultan …

I cite Forest City to show the scale of what is now possible, not just in terms of physical infrastructure (and the sheer speed of its deployment), but financial infrastructure as well. Forest City is a $100 billion real-estate punt. Port Blair, for similar money, would be simply epoch-making.

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I am Andy Marino, biographer of Narendra Modi, and this site is designed to explain Indian economics and finance, government and politics, culture and history to Western investors, businessmen and entrepreneurs. For more information, click on my Intro section.